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California Sees Huge Drop in Film Production, Ranks Behind Louisiana and the U.K.

"Star Trek Into Darkness" was one of the few films of 2013 that was shot primarily in California.

The state's share of the top 25 live-action films declined from 64 percent in 1997 to just 8 percent in 2013.

If there was ever a question about the impact and value of financial incentives to attract movie and TV production, it is dramatically dispelled in a new report released Thursday by the nonprofit group FilmLA that traces English-language movie production worldwide in 2013.

California, which was the dominant location for big movies 15 years ago, today is a poor fourth behind Louisiana and the United Kingdom.

How dramatic is the drop? If you exclude animated features, California's share of the top 25 live-action films declined from 64 percent in 1997 to just 8 percent in 2013. Of 26 live-action movies with budgets over $100 million, only two were made primarily in California – TheHangover Part III and Star Trek Into Darkness.

The report says Star Trek only shot in California because director J.J. Abrams insisted on it, adding: "Now that Abrams is also directing the new Star Wars movies in the United Kingdom, Paramount has signaled they will shoot the next Star Trek film outside of California as well."

California also saw a precipitous decline in visual effects work. The report says that there's a common myth that California gets the visual effects postproduction no matter where a movie is made. The report says that is not true.

Today, there is only one VFX company left in California, Industrial Light & Magic, and it is expanding in Vancouver, not the San Francisco Bay Area, where it is based.

At the heart of this shift are the incentives offered to bring movies to locations all over the world. The report says that with the exception of California, all of the top five locations last year were places offering "substantial uncapped film incentive programs."

Uncapped means that the state does not set a limit on how much it will spend in a given year, unlike California, which has a cap of $100 million in tax incentives that does not come close to meeting the demand, and at present does not even allow for the biggest budget movies or network TV series to apply. New legislation was recently introduced in California to change that.

No area has benefited more from its incentive program than Louisiana, which was the production site of more of the big movies in the survey in 2013 than any other state, with a total of 18. That was followed by Canada with 15, California with 15 and the United Kingdom with 12. The state of Georgia was fifth, with nine productions out of 108 features measured in the report.

The report used a number of sources to try to measure just how many jobs these movies created in total. It finds that there were 14,170 jobs created in Canada, 13,690 in Louisiana, 13,032 in the U.K. and 8,566 in California.

According to the researchers, Canada also had the largest amount of money spent on location, with $887 million from movies with budgets of about $1.3 billion. Second was the U.K. where $843 million was spent. Third was California, where just over $1 billion was spent. Louisiana was fourth with a spend of $750 million; while Georgia was fifth with $261 million spent.

In terms of movies, the biggest incentive amount paid was to The Great Gatsby, which got $85 million on a budget of $190 million from Australia. The number two movie was Oz the Great and Powerful, which got $39.8 million in incentives from the state of Michigan. Number three, The Wolverine, which was also shot primarily in Australia, received $26 million in incentives. That was followed by GI Joe: Retaliation, which received $30.4 million from the state of Louisiana, and The Hobbit: The Desolation of Smaug, which got $25.8 million by shooting in New Zealand.

In an interesting aside, the report says that exotic locations and even setting a movie where the picture's story takes place – which used to be considered a given – today is not as important as the incentives. It notes that a movie called Battle: Los Angeles was actually set in Louisiana; and Iron Man 3, with a budget of about $200 million, was shot in North Carolina, which offered a 25 percent incentive. (Iron Man 2 had been shot primarily in California.)

California does continue to lead as the home of most of the big animated movies, but the report points out "this advantage is beginning to diminish."

Of 10 big-budget animated movies released in 2013, only four were made in California. Other places where the big animated movies were made included Connecticut, Texas, Vancouver, France and India.

The report notes that generous subsidies continue to lure animation work out of California. Most notably Vancouver, British Columbia, has convinced Sony Imageworks to more than double the size of its workforce there, from 100 to 250 people, even as it shrinks its workforce in Culver City, Calif. Pixar actually cut its workforce in Vancouver but overall, the growth there continues.

When it comes to musicians and all kinds of vendors, from equipment to catering, the businesses are following the work out of California. "The negative economic impact for California is well into the billions of dollars on an annual basis," says the report, which calls the pace of this migration "dizzying."

"The film and entertainment industries are absolutely essential to California's middle class, and this underscores the importance of our work to level the playing field against the other states and countries who are luring our jobs away," says Los Angeles Mayor Eric Garcetti. "These jobs not only support California families, they generate revenues that pay for schools, infrastructure, and other state services."

"Considering California's vast filmmaking talent, the state should be exporting films for global audiences, not jobs to global competitors," says FilmL.A. president Paul Audley. "State policymakers have the opportunity to make a difference this year by expanding California's film and television tax credit."